With its four-story windmill and medieval facade, Malibu Castle in Redondo Beach beckoned motorists traversing one of the country’s busiest freeways with promises of family fun.

Today, the miniature golf putting mats are faded and the arcade games and castle that housed them have long been taken away. Tall weeds sprout from broken concrete. Walls are covered in graffiti.

Once a regional attraction for families and young people on dates, Malibu Castle has been a haven for the homeless for years.

“It used to be beautiful here,” said Rich Williams, 48, who recycles cans and bottles for money and said he had been living in a camping tent on the overgrown stretch of property on Marine Avenue for about four months. “I used to come down here as a kid and play putt-putt. So it’s been unique to be a part of its demise.”

On a recent afternoon, three tents rose from the ruins of the old miniature golf course. The drone of traffic from the San Diego (405) Freeway echoed in the warm air.

“Once in a blue moon someone will come down here and take pictures,” Williams said. “Living by the freeway, we’re not supposed to be down here. But where are we supposed to go?”

The amusement park was a popular attraction for decades, but it closed in 2005 to make way for new development. A city-owned hazardous waste recycling yard popped up a short time later but closed in 2007. Today the property is surrounded in barbed wire and a chain-link fence. The last of the park’s golf statuettes – the Dutch-inspired windmill, a Mayan temple, a tiki hut surrounded by lava rock – have been torn down.

Police work with the property’s owner and developer to monitor the area, occasionally conducting sweeps. There have been assaults and an attempted murder. On a late afternoon in early February, a 26-year-old transient hung himself from a tree towering above the old golf course. Friends painted a mural on the site paying tribute to the man, Donald Hale. Williams said he helped cut the tree down after Hale’s death. The suicide was confirmed by Los Angeles County coroner officials and Redondo Beach police.

“We go out there routinely and check to make sure it’s empty,” said Redondo Beach police Sgt. Dave Christian. “There’s been a lot activity out there for quite some time.”

But new life for the property could be coming soon. Plans are being revived to develop two hotels on the 5-acre parcel.

The project, a proposed Marriott Residence Inn and a Hilton Garden Inn, has already won approval from the city’s Planning Commission. The City Council in November 2010 signed off on a ground lease and financing terms, despite earlier protest by officials from the Lawndale-based Centinela Valley Union High School District, who argued the city did not sufficiently study environmental impacts.

But the proposal by developer TRCF Redondo LLC fell through after financing dried up because of the stale economy.

“The developer and city have been working together since then to put new financing into place to allow for construction to begin,” said Peter Grant, Redondo Beach assistant city manager. “The capital markets are still recovering from the recession, so securing financing for the project is going to require help from the city.”

Citing the ongoing negotiations, Grant declined to disclose the city’s portion of financing for the hotel project.

But under the lease deal approved in 2010 by the City Council, funding would have come from $45 million in bonds through the California Enterprise Development Authority as part of the federal American Recovery and Reinvestment Act.

If the revived hotel deal moves forward, the payoff could be huge. The city anticipates collecting more than $2 million annually in hotel bed taxes alone, Grant said.

“The project will benefit the community through more than just tax revenue,” Grant added. “That site has never really contributed economically to the area. So it’s exciting, despite how challenging the project has been, that the council has an option to turn the site into a community amenity.”

The two hotels will be four stories high, occupy 200,000 square feet of land, and have a combined total of about 320 rooms and conference facilities. They would be the first hotels built in the city in decades.

“That’s an industrial area that has been fairly rundown for a long period of time,” said Brad Wagstaff, managing partner of the project’s developer, TRCF Redondo, LLC. “We’re hoping it becomes a nice catalyst.”

The City Council could vote on the deal by early November. If the project moves forward, construction is expected to last 14 months, Wagstaff said.

A portion of the land is owned by the city, while a second section of about 3 acres next to Marine Avenue is owned privately by Redondo Industrial Park LLC.

The privately owned land, a parcel of just more than 3 acres zoned for hotels and auto dealerships, has been valued at $618,737 by the county Assessor’s Office, property records show.

The space is ripe for development primarily because of its prime location near the the 405 Freeway, Metro Green Line station and aerospace companies in Redondo Beach and El Segundo, city officials said.

“We’ve wanted to make this deal go through because of the positive aspects for the city of Redondo Beach,” said Councilman Matt Kilroy, whose district includes the property. “We felt it was the best use for that piece of property. We have been trying very hard to make this work.”

But for now, the place sits empty. A security guard monitors the area in a small camper. About a week ago, the remaining residents, including Williams, left. Many of the homeless, when told to leave by authorities, simply crossed a flood control channel and pitched their tents on a portion of Caltrans-owned property next to the freeway.

“We’ve been working to keep people off the property,” Wagstaff said. “It has been frustrating.”

Williams and another man, who declined to give his name, said they had spent the last several months helping to clean up the old Malibu Castle site by cutting down trees, hauling away trash and keeping people away.

“Every day we’re hauling up trash and recycling anything we can find,” Williams said. “You’d be surprised what people throw away.”

As many as 15 people have lived in the area at a time, Williams said.

“Usually it’s pretty mellow,” he said. “Maybe to a lot of people we are a nuisance, but I’m not. Just a shower for some of these people would be nice.”